As the Center for Medicare Advocacy wrote in our January 2020 CMA Alert, the Chairmen and Ranking Members of the House Ways & Means, Energy & Commerce, and Education & Labor Committees sent a letter that month to the Secretaries of Health and Human Services (HHS) and Department of Labor (DOL) asking the “agencies to address the confusion and financial risks that often confront Americans who are Medicare-eligible and receive coverage under a group health plan subject to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).” See the press release issued by the Energy & Commerce Committee here.
Due to the complex rules surrounding Medicare secondary payment, coordination of benefits, and Part B enrollment, coupled with a lack of adequate information provided to former employees who choose to take COBRA coverage when they are eligible (or near eligibility) for Medicare, such individuals often face “unexpected penalties and unnecessary out-of-pocket expenses” (see, e.g., CMA Alerts the Center wrote in November 2015 about problems surrounding the interaction between COBRA and Medicare: Parts I, II and III).
The Committees called on the federal agencies to “develop a strategy that effectively addresses the issue and to produce informative and clear communications for affected Americans.” The Center for Medicare Advocacy strongly supports this effort.
Updated Model COBRA Notices
In May 2020 the Department of Labor released updated model COBRA notices and Frequently Asked Questions (FAQs) that address Medicare coverage. These documents are available here.
The Medicare-related language in the Model General Notice includes the following (at p. 3):
Can I enroll in Medicare instead of COBRA continuation coverage after my group health plan coverage ends?
In general, if you don’t enroll in Medicare Part A or B when you are first eligible because you are still employed, after the Medicare initial enrollment period, you have an 8-month special enrollment period to sign up for Medicare Part A or B, beginning on the earlier of
- The month after your employment ends; or
- The month after group health plan coverage based on current employment ends.
If you don’t enroll in Medicare and elect COBRA continuation coverage instead, you may have to pay a Part B late enrollment penalty and you may have a gap in coverage if you decide you want Part B later. If you elect COBRA continuation coverage and later enroll in Medicare Part A or B before the COBRA continuation coverage ends, the Plan may terminate your continuation coverage. However, if Medicare Part A or B is effective on or before the date of the COBRA election, COBRA coverage may not be discontinued on account of Medicare entitlement, even if you enroll in the other part of Medicare after the date of the election of COBRA coverage.
If you are enrolled in both COBRA continuation coverage and Medicare, Medicare will generally pay first (primary payer) and COBRA continuation coverage will pay second. Certain plans may pay as if secondary to Medicare, even if you are not enrolled in Medicare.
For more information visit https://www.medicare.gov/medicare-and-you.
The Medicare-related language in the FAQ document includes the following:
Q2: I didn’t enroll in Medicare when I first became eligible because I was still employed, but I recently lost my job. Can I enroll in Medicare now after my group health plan coverage ends?
Yes, and there may be advantages to enrolling in Medicare before, or instead of, electing COBRA. In general, if you don’t enroll in Medicare Part A or B when you are first eligible because you are still employed, after the Medicare initial enrollment period, you have an 8-month special enrollment period to sign up for Medicare Part A or B, beginning on the earlier of
- The month after your employment ends; or
- The month after group health plan coverage based on current employment ends.
If you don’t enroll in Medicare and elect COBRA continuation coverage instead, you may have to pay a Part B late enrollment penalty and you may have a gap in coverage if you decide you want Part B later. If you elect COBRA continuation coverage and later enroll in Medicare Part A or B before the COBRA continuation coverage ends, the Plan may terminate your continuation coverage. However, if Medicare Part A or B is effective on or before the date of the COBRA election, COBRA coverage may not be discontinued on account of Medicare entitlement, even if you enroll in the other part of Medicare after the date of the election of COBRA coverage
Q3: What health coverage pays first if I’m enrolled in both Medicare and COBRA?
If you are enrolled in both COBRA continuation coverage and Medicare, Medicare will generally pay first (primary payer) and COBRA continuation coverage will pay second. Certain plans may pay as if secondary to Medicare, even if you are not enrolled in Medicare.
Conclusion
While the new Medicare-related language in the model COBRA notices is not comprehensive (e.g., it does not address potential impacts on spousal coverage, and how COBRA might work differently for individuals with ESRD), and does not include a strong enough warning about the dangers of foregoing Part B coverage and retaining COBRA coverage, it will hopefully help some people avoid the pitfalls of Part B enrollment problems associated with COBRA coverage.